Bank of America agreed to pay the the Securities and Exchange Commission (SEC) $33 million in fines on Monday for failing to disclose the bonuses Merrill Lynch paid employees after being acquired by Bank of America last December.
The SEC accused Bank of America of telling the commission that Merrill wouldn't pay out bonuses or discretionary compensation before having been officially bought out by Bank of America.
The Wall Street powerhouse agreed to pay the $33 million settlement as part of an agreement with the SEC, but without admitting the allegations.
“Companies must give shareholders all material information about corporate transactions they are asked to approve,” said Robert Khuzami, director of the SEC’s Division of Enforcement, in a statement. “Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today’s settlement.”
The payment of bonuses to Merrill employees, especially its top executives, had stoked outrage in Congress and investigations from the SEC and New York state Attorney General Andrew Cuomo (D).
Other elements of the Bank of America-Merrill deal have been closely examined by the House Oversight and Government Reform Committee in recent months. That committee has been investigating whether Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson had threatened each bank's executives when a deal almost stalled, and then helped obfuscate Merrill's toxic assets from Bank of America stockholders before a deal was finalized.
"While the settlement Bank of America reached with the SEC does not include an admission of liability, the circumstances certainly underscore the need for us to continue our investigation of the Bank of America - Merrill Lynch acquisition and the role officials at the Treasury and Federal Reserve had in pressuring the acquisition to move forward," said Rep. Darrell Issa (R-Calif.), the ranking member on the House Committee on Oversight and Government Reform.
This story was updated at 2:05 p.m.